An FS Superhero: Step Forward the CRO

For many years, and certainly since the 2008 crisis, the Financial Services CRO was seen as a ‘first aider’, there to tend to regulatory pressure; someone to provide controls and guidelines. Now, more than 10 years later, it is true to say that this is no longer solely the case; the role of the CRO has changed and continues to evolve. There is no going back.

The pandemic has without doubt shone a light on the vital role the CRO plays in future-proofing an organisation. Norman Broadbent is witnessing a sharp increase in demand for Financial Services organisations seeking to seriously invest in their risk function capabilities for 2021/2.

Here we look at how the CRO is rapidly evolving and becoming increasingly critical to the future of Financial Services organisations:

More Than Ever: A Critical Advisor

From origins as a somewhat limited control function to becoming a critical advisor to the CEO and board, the emphasis is on the CRO to help shape a sustainable growth strategy in these extraordinary times. It is pivotal the CRO looks at the broader landscape to be able to do this effectively, supported by a balanced risk appetite.

Holistic Risk Landscape

Where historically they focussed predominantly on financial risk, the CRO now has a much broader remit. The CRO must have not only non-financial risk in focus – cyber risk, tech risk, people risk, compliance risk, fraud risk and so on – but also other wider, external risks including, for example – climate risk.

The Risky New Working Environment

Remote working is here to stay in one way or another. As already highlighted, cyber risk and fraud are high on the agenda for the CRO and are particularly pertinent now. It is critical that sensitive data is protected against access through insecure networks and devices. CROs need to be acutely aware of this and act accordingly – and continually – in strengthening cybersecurity practices to mitigate risk.

“Norman Broadbent is witnessing a sharp increase in demand for Financial Services organisations seriously wanting to invest more in their risk function capabilities for 2021/2”

What’s in the Toolkit?

Old fashioned, risk measurement tools are no longer good enough in assessing the wide-ranging risk in these unprecedented times. The new CRO needs to embrace forward-looking risk management tools such as dynamic stress testing, scenario planning and advanced analytics to help drive precision and efficiency.

Culture – One Step Ahead

The new CRO truly needs to be everyone’s’ trusted best friend – internally and externally – to effectively shape risk strategy and engrain this into the culture of their business.

By proactively and collegiately working with other key, senior stakeholders, the CRO can ensure they have the “full picture” at all times and be able to influence from a position of strength. It is becoming more important than ever to work with the board to help the entire organisation be risk aware, further enabling sustainable growth.

Innovation

There is a huge opportunity for the CRO to shape innovation. If the pandemic has taught us anything in the last 12 months, it is to expect the unexpected. 2021 and beyond will call for the CRO to think, embrace and challenge when it comes to systemic risk. Nothing is off the table anymore. Those who are already doing this will have a huge competitive edge in what is a rapidly changing risk landscape.

The modern day CRO has been on a major transitionary journey recently; long gone is the audit-like character who colleagues would dodge as they brought only more paperwork. Now we see a multifaceted and highly commercially minded individual who can influence stakeholders at all levels. With companies now truly understanding the value that effective risk management can add, the modern CRO must be able to engage a whole business in undertaking processes that will not only improve customer outcome (and thus retention) but also potentially save that organisation money by avoiding breach fines and so on. In addition, the strong link between future risk prediction and M&A activity should not be underestimated in the commercial space. Put simply, the right CRO can make a huge impact on the success of an organisation and 2021 will provide even more opportunities for the CRO to take centre stage.

If you would like to discuss our findings in more detail or the wider market and /or your hiring plans for 2021, please do not hesitate to contact Clare Nash, Director of Financial Services via clare.nash@normanbroadbent.com or +44(0)7483 015591